Government credit card transactions 'that appeared to be of a personal nature' are cited

The Louisiana Legislative Auditor's Office has given St. Bernard Parish the lowest grade ranking -- a D -- on its audit of parish government budget practices in 2011. The audit notes government credit card transactions previously highlighted by The Times-Picayune "that appeared to be of a personal nature that were not timely reimbursed by the Parish President," along with several other issues including poor parish oversight of federal disaster recovery projects, sloppily recorded parish assets and an aggressive spending of cash accounts.

View full sizeRusty Costanza, The Times-Picayune archiveCraig Taffaro greets supporters at Rocky & Carlo's restaurant in Chalmette after being elected St. Bernard Parish president in November 2007.

The St. Bernard Parish government would not comment on the 117-page audit until it is officially released by the Legislative Auditor on Monday. The Times-Picayune received a draft copy.

The audit was supervised by Jeremy Thibodeaux, an accountant with Ericksen, Krentel & LaPorte of New Orleans.

Overall, the audit states it "identified certain deficiencies in internal control over financial reporting that we consider to be material weakness and other deficiencies that we consider to be significant deficiencies."

In terms of the credit card transactions, the audit notes that "state revised statutes prohibit public funds to be used for non-public purposes."

A Times-Picayune review of parish credit card records earlier this year showed that taxpayer money was spent on bicycle supplies, marathons and numerous meals and travel under former Parish President Craig Taffaro. The day after the newspaper story on the credit card abuses appeared, the state attorney general's office picked up copies of all Taffaro administration credit card records.

Taffaro has responded that while in public office his role "and that of the team members of my administration was to respond to and rebuild a devastated community" after Hurricane Katrina and "we overcame enormous obstacles, established productive partnerships with local, state, and federal agencies and set St. Bernard Parish on a course toward a successful recovery."

The Times-Picayune found that Taffaro's administration charged about $180,000 to credit cards from 2008 to 2012 and that credit card expenses on a few of the meals included alcohol -- a violation of state law -- and despite a stringent parish policy, hardly any documentation was kept for many purchases and meals.

The audit notes "several transactions that appeared to be of a personal nature" but does not go into specifics.

In August 2011, Beverly Gariepy took over the parish finance department and developed a new form that requires card users to explain the "Public Purpose of Expense." At that point, use of the parish credit dropped dramatically.

In additional to the credit card expenses, the recent audit notes that CDM Smith, whom the Taffaro administration contracted to manage recovery projects, spent much more on federal disaster recovery projects than budgeted and yet the parish never amended its budget to reflect the added expenditures.

The audit states that numerous recovery projects were not closed out because of lingering questions surrounding the eligibility of expenses submitted for reimbursement. Many recovery projects had significant cost overruns.

The parish is required by state law to amend its adopted budget when expenditures exceed budgeted projections by 5 percent or more, but the audit notes that the parish did not do so for the recovery department expenses.

Due to such overspending, the audit states that "the parish may face a shortfall of funding and potential liability as it closes out the recovery process."

CDM Smith's apparent lack of oversight also was noted.

"St. Bernard Parish personnel were not empowered to provide oversight or maintain accountability over the recovery effort," the audit states.

Additionally, the audit discusses inadequate accounting of the parish's general fixed assets, mainly property and equipment.

"Significant 2011 asset additions were not accurately identified, quantified and added to the fixed asset system until June 2012," the audit states.

The electronic data files that existed detailing parish assets were corrupted, and during the transition from Taffaro's administration to that of David Peralta, who took office in January, the new IT department did not know where the backup files were and thus could not retrieve and restore such files, the audit states.

Also during 2011, the parish administration reduced most of its cash accounts to below zero, according to the audit. Essentially, the administration borrowed cash from other funds that had positive balances to compensate for draining the general fund, the consolidated fire protection districts fund and the human resources fund to negative balances.

And the audit states that the parish lacked receipts for some of its cash purchases.

The St. Bernard Parish Housing Authority also is highlighted. The audit states that the parish underreported the parish housing authority's assets by about $1.2 million and that its total cash and investments were insufficient to support such assets.

In other words, the housing authority improperly tracked and used its U.S. Housing and Urban Development funds. Also, the audit states that neither the housing authority nor the parish could account for the spending of about $1.7 million.